Chapter 3 Elasticity Flashcards
1
Q
PED
A
PED measures the responsiveness of quantity demanded of a good due to a change in its price, ceteris paribus
If PED > 1, good is price elastic
%change quantity demanded / % change price
2
Q
PES
A
PES measures the responsiveness of quantity supplied of a good due to a change in price of the good itself
%change quantity supplied/ % change price
3
Q
PED factors
A
Proportion of income
Availability of substitutes
Nature of goods
Time period
4
Q
PES factors
A
Gestation period
Excess capacity
Mobility
